The Guptas-owned Lloyds Steel Industries is set to be referred to the Board of Industrial and Financial Reconstruction (BIFR), after having posted losses for three continuous years.
The company posted whopping losses of Rs 406.51 crore for the fiscal ended March 2001, completely wiping out its reserves of Rs 387.49 crore. The losses were higher by 50 per cent against Rs 264.79 crore in 1999-00.
However, the flagship is still net worth positive, with a net worth of Rs 576.11 crore as of March 31, 2001. The company posted losses from 1997-98 at Rs 38.42 crore and then Rs 211.12 crore in the next year.
The company has informed its shareholders that it has to now mandatorily be referred to the BIFR.
"The board has formed an opinion that the company has become a sick company as defined under Section 3 (1)(o) of sick Industrial Companies (special provisions ) Act, 1985. Reference will be made to the BIFR to seek determination of measures which could be adopted as required under the specific act," it has said in its latest annual report.
Its turnover was also lower during the last year at Rs 494 crore from Rs 538 crore during the previous year.
The company has a capacity to produce 4 lakh tonne of hot-rolled coil and 1.8 lakh tonne of cold-rolled products. The company's steel exports stood at Rs 37.34 crore during the last fiscal.
Lloyds Steel's outstanding debt stand at an enormous Rs 2,165 crore -- more than four times its turnover of last year -- of which Rs 2,028 crore are secured loans.
The company's interest burden rose heavily to Rs 288 crore, from Rs 214 crore in the previous fiscal. The finance charges represent more than half the company's turnover.
The group was planning a major restructuring between Lloyds Steel and Lloyds Metals, under the advice of Ernst & Young. Under the plan, the engineering division of Lloyd Steel and the CR division of Lloyds Metals would be demerged to form Encon Technologies.
Besides, the steel division of Lloyds Steel and the pipes and special iron division of Lloyds Metals was to be amalgamated to form Insco Steel. However, the restructuring has not taken off following objection from State Bank of India, one of the lead bankers.
